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GDT price dip a 'short-term reaction'

NZN 21/02/2017 Margreet Dietz

Dairy product prices have fallen at Fonterra's GlobalDairyTrade auction, stemming two straight gains amid increased supply.

The GDT price index fell 3.2 per cent and the average price per tonne to $US3474 ($US4848), down from $US3537 at the previous auction two weeks ago. Some 20,479 tonnes of product was sold, down from 21,273 at the previous auction.

Whole milk powder slid 3.7 per cent to $US3189 a tonne.

Last week Fonterra, the world's biggest dairy exporter, said it would have more product available for sale on GDT after it upgraded its milk intake expectations for the current dairy season.

"Many buyers will be aware that milk intakes in New Zealand are starting to improve following very poor production during the spring," AgriHQ dairy analyst Susan Kilsby said in a note.

"The dairy markets however are very closely balanced so it does not take much to tip the balance one way or other with small changes in supply volumes."

However, the outlook remains positive and the underlying market fundamentals were generally supportive for Oceania-sourced product, she said.

"We see this as more of a short-term market reaction to the change in Fonterra's milk forecast than the start of anything more serious."

But a less positive NZ First leader Winston Peters said the price increases in January and February had been effectively wiped out.

"Farmers have heard enough of the false optimism before and weathered the sad reality, so they will have learned to be cautious about these Pollyanna-like experts blowing smoke," he said.

Within the auction, butter milk powder sank 12.9 per cent to $US2090 a tonne, while rennet casein dropped 5.8 per cent to $US6135.

Cheddar retreated 5.3 per cent to $US3590, while skim milk powder declined 3.8 per cent to $US2574.

Anhydrous milk fat declined 1.3 per cent to $US5693.

Bucking the trend, lactose climbed 6.8 per cent to $US966, while butter inched 0.2 per cent higher to $US4598.

There were 114 winning bidders out of 149 participating at the 12-round auction. The number of qualified bidders was 530, the same as at the previous auction.

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